Despite frequent public appearances by OpenAI CEO Sam Altman, the company’s internal structure and operations remain notoriously opaque. But startup Levels.fyi has uncovered information about a key aspect of OpenAI’s strategy: the compensation package the company offers to attract engineers to the company.
According to Levels. FYI, OpenAI is offering an annual salary of up to $925,000 (currently about RMB 6,697,000) to attract software engineers to join the company. This salary includes a base salary of $300,000 and $625,000 in profit participation units (PPUs), an incentive mechanism created by OpenAI to allow employees to share in the company’s future profitability. Because OpenAI is not a company in the normal sense of the word and cannot sell shares, it uses PPUs as a way to compete with large technology companies for talent.
PPUs are different from stock options or restricted stock units in that they are profit-based interests that only have value when the company’s earnings exceed a certain threshold. Employees have two options for converting PPUs into money; the first option is to hold PPUs until the company makes a sizable profit — which can take years for an organization whose stated goal is to spend billions of dollars developing general AI. The second, more straightforward option is to sell them to other buyers, and because OpenAI is structured as a “profit-capped” company, the PPUs can only be sold for up to 10 times their original value. In addition, OpenAI’s PPUs have a two-year lock-up period, meaning that new employees must hold them for two years before they can be sold. According to Zuhair Musa, CEO of Levels.fyi, OpenAI has done a buyback in January of this year to allow employees to sell these PPUs.
PPU is a mechanism that has been widely used in the private equity sector, but it is the first of its kind in the technology industry. Moussa believes that this is a result of OpenAI’s particular structure and will not cause other startups to follow suit. But this approach does allow OpenAI to remain competitive in an increasingly tight labor market in artificial intelligence.
Levels.fyi is a startup that specializes in collecting and providing information on compensation, benefits and career development across a wide ra
